Don’t hold breath for big mortgage cuts, says expert, as KBC cuts key fixed-rates
Borrowers shouldn’t hold their breath for Irish banks to cut mortgage rates by any great extent despite the ECB being widely-tipped to cut some official rates next month, a leading broker has said.
Michael Dowling was speaking after KBC Bank cut a range of its fixed home loan rates — its two-year and 10-rate home loan rates — to help keep their market-winning edge.
The KBC reductions include it offering a rate of 3.2% for borrowers at a loan-to-value (LTV) of 90% who fix for 10 years, as well as a rate of 2.3% at the same LTV for borrowers fixing home loans for two years.
Mr Dowling said KBC’s reductions were ahead of potential moves in September when the ECB at its post-summer meeting is seen acting to push European borrowing costs lower for longer because of the darkening clouds over the eurozone economy.
He said that the Irish banks had “every reason” to cut mortgage rates because, despite ECB rates already being at rock-bottom, Irish mortgages were among the costliest in the eurozone.
However, he believes that many lenders will fail to make any meaningful reductions after the summer. “At the end of the day there is every reason for banks to reduce rates a bit further.”
Mr Dowling said KBC was likely trying to regain a competitive edge after Permanent TSB appeared to have gained market share by offering cash-back mortgages.
Experts have said first-time borrowers will likely end up paying more over the lifetime of a mortgage by signing up to cash backs.
Daragh Cassidy at bonkers.ie, said that Bank of Ireland, Ulster Bank, and KBC had cut rates in recent times.
“This is undoubtedly good news for consumers but we shouldn’t lose sight of the fact that average mortgage rates in Ireland still remain among the highest in the eurozone at just over 3%.”
Mr Cassidy particularly welcomed the KBC reductions in its 10-year fixed rates, saying the lender was “now the market leader across the one-, two- and 10-year fixed periods”.
KBC Bank said its new rates are available to first-time buyers, switchers, and movers.
